How Trump uses supporters' donations to pay his legal bills

Former President Donald Trump faces a mountain of legal bills as he defends himself against a wide array of federal and state charges, with the latest coming this week in Georgia.

To pay lawyers, he has often turned to money from supporters: Over the past two years, he has drawn tens of millions of dollars from a political action committee he controls called Save America PAC. Originally set up in 2020 as he galvanized supporters around his baseless claims of election fraud, the group — technically known as a leadership PAC — has been sustained in large part by contributions from small donors.

Experts say the practice is most likely legal but that it raises ethical questions about how. Trump treats his donors.

Why is he doing this?

Because Trump, who is famously tightfisted with his personal fortune, has mounting legal bills, a ready source of cash to cover them and not much standing in his way.

Even before he entered the 2024 race, Save America was paying his legal bills as he faced federal and state investigations into his business practices, his efforts to overturn the 2020 election, and his handling of classified documents after he left the White House.

As charges have arrived, the legal bills have ballooned. Trump will have to pay lawyers in Florida, Georgia, New York, and Washington, D.C., as well as costs for things like databases for managing discovery.

According to its public filings, Save America has also paid lawyers who are representing witnesses in the Trump investigations, including the congressional inquiry into the Capitol riot, raising questions about possible efforts to influence testimony.

Steven Cheung, a spokesperson for Trump, has said that the PAC is paying legal bills for witnesses to protect them from “financial ruin.” Cheung did not respond to requests for comment Wednesday.

In 2021 and 2022, Save America spent $16 million on legal bills, The New York Times has reported. In the first six months of this year, almost one-third of the money raised by his committees and the super PAC backing him has gone toward legal costs — more than $27 million, according to a Times analysis of federal records.

The legal payments could have tax implications, some experts said, if the underlying legal matter were deemed by the Internal Revenue Service to be related to Trump personally, rather than to his official role. The payments could, in theory, count as taxable income for Trump.

But other experts said that the broad discretion of campaign finance laws would most likely shield him from any tax liability.

Is it legal?

Most likely, yes, although the rules governing what PACs and campaign committees can pay for are byzantine and not firmly settled.

A campaign committee cannot pay for things that benefit a candidate personally, including legal bills that are unrelated to government matters.

There is no such restriction on leadership PACs. While these organizations, which are controlled by the candidate, cannot spend money directly on the campaign, they can pay for legal fees.

“Under prevailing FEC interpretation, this whole discussion is moot,” said Saurav Ghosh, a former lawyer at the Federal Election Commission who is now the director of federal campaign finance reform for the Campaign Legal Center, a nonprofit group. “He can pay all the lawyers, for all the matters, and according to the FEC, these rules don’t even matter.”

The more important question, Ghosh said, is: “Is that an abuse of donors?” Trump is raising money for one stated reason — his run for office — and apparently using some of it for another, his legal troubles, Ghosh said. “I think it sets a very bad precedent.”

Save America’s fundraising efforts have been a focus of one of the investigations by the special counsel Jack Smith, who has brought indictments against Trump in Washington and Florida. Smith’s team has asked why Save America is paying some witnesses’ lawyers.

Trump’s team is also setting up a legal-defense fund to help cover some of his allies’ legal fees, the Times reported last month. The fund is not expected to cover Trump’s own bills, but it could alleviate pressure on Save America.

Do Trump’s donors and supporters care?

Neither the indictments nor the reports about how he is paying for his legal expenses have dented his popularity in polls. Trump’s die-hard followers seem to have embraced his legal cause as their own, and he has used each indictment as an opportunity to solicit financial contributions.

Former Gov. Chris Christie of New Jersey, a onetime Trump ally turned fierce critic who is running for the Republican presidential nomination, has called attention to Trump’s use of donor money to cover his legal bills.

Speaking this month on CNBC, Christie said: “And the fact is, when you look at just his campaign filings yesterday, almost most of the money that middle-class Americans have given to him, he spent on his own legal fees.”

Christie continued, “I mean, this guy’s a billionaire.”

How, exactly, does it work?

Since Trump set up Save America after the 2020 election, it has been a war chest to sustain his political operation. It has brought in more than $100 million, but it has also been spent quickly, including on legal bills.

In February 2022, the PAC said it had $122 million in cash on hand. By the beginning of this year, that number was down to $18 million, filings show. More than $16 million of the money spent went to legal bills — some for witnesses in the investigations, but mostly to firms representing Trump.

A further $60 million was transferred in late 2022 to MAGA Inc., a super PAC supporting Trump.

This year, Save America asked the super PAC for the money back, a sign of the committee’s growing need for cash.

Most of the money that has gone to legal fees came from cash that Save America stockpiled between 2020 and 2022. But Save America is also receiving 10 per cent of every dollar being donated to Trump.

Here’s how it works: Trump now raises money primarily through the Trump Save America Joint Fundraising Committee, a type of group that allows candidates to divide contributions between their campaign and another committee.

In November, when Trump began his campaign, 99 cents of every dollar raised into the committee went to his campaign committee, and 1 cent went to Save America.

But as the Times reported in June, sometime this year the split changed: 90 per cent of the money went to the campaign, while 10 per cent went to Save America — 10 cents on every dollar raised went to the PAC that Trump has used to pay his legal bills.